In the text bellow I explain the different columns in the order they are displayed.
1. Dividend Growth
The column contains my estimate of what the the dividend growth will be in the next 20 years, this estimate plays a central role in the achievement of our long-term savings goal. I look at how the dividend growth has developed on average annually over the past ten years, which gives me a benchmark to work from. Based on the benchmark together with my other investment criteria I make an estimate of how high dividend growth I can expect in the coming 20 years. The criteria I mainly look at to determine the future dividend growth are:
- The way earnings per share (EPS) has developed.
- Development of the free cash flow.
- How much of the profit / cash flow that is distributed today.
- Strength of the balance sheet.
2. Fair Price 1
The column shows what I perceive to be a fair price based on the anticipated dividend growth and the yield required to achieve our long-term savings goal. I use the table that you can find under the Investment Criteria in the main menu to determine the yield that my estimated dividend growth requires of a potential stock. When I know the yield that is required, I use the size of the current distribution to calculate the rate that corresponds to the specified yield.
3. Current Stock Price Compared to Fair Price 1
The column shows the percentage by which the current share price exceeds or falls below Fair Price 1.
4. Sustainable Earnings Per Share (EPS)
The column contains an estimate of what I consider to be a sustainable level of earnings per share. I look at how EPS have developed historically which gives me a benchmark to work from. Based on the historical EPS data together with my other investment criteria I then determine what I think is a sustainable level of EPS
5. Sustainable P/E ratio
This column shows the P/E ratio which I believe is sustainable over time for the company in question. That which determines what I consider to be a sustainable P/E ratio is how well the company responds to my company specific criteria such as the strength of the balance sheet, competitive advantages, future EPS growth, risks associated with the Company's business, etc.
6. Fair Price 2
This column contains the result of sustainable EPS multiplied by the sustainable P/E ratio.
7. Current Price Compared to Fair Price 2
Shows the percentage by which the current share price exceeds or falls below Fair Price 2 (EPS x P/E ratio).
8. Price Cap (The Mean of Fair Price 1 & 2)
This column contains the price I am willing to pay at the most for a given stock. The price is the average value obtained when Fair Price 1 (based on dividend growth and dividend yield) and Fair Price 2 (based on sustainable EPS and sustainable P/E ratio) are compared.
9. Above/below Price Cap (Current Price/Price Cap)
The columns shows by how many percent the current share price exceeds or falls below what I most want to pay (The Price Cap). This is the column that I use to sort the list by.
Key figures associated with the companies on my Watch List (The list is sorted by yield and in descending order)
The text bellow explains the different columns in the order they are displayed.
- Company
- Ticker (symbol)
- Market (Marketplace: STO = Stockholm, STLO = Oslo, NYSE = New York, NASDAQ, HEL = Helsinki)
- Price (Current)
- Yield (Current yield)
- Payout Ratio (Payout ratio based on EPS (last four quarters) and the current dividend)
- P/E-Ratio TMM (based on EPS for the last four quarters)
- EPS TTM (Earnings per share for the last four quarters)
- Dividend (dividend on an annual basis)
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